UAE Enhances Ultimate Beneficial Ownership (UBO) Regulations: An Overview
In a series of legislative updates, the United Arab Emirates (UAE) has recently revised its Ultimate Beneficial Ownership (UBO) regulations and associated penalties. This development, including Cabinet Resolution No. 109 of 2023 and Cabinet Decision No. 132 of 2023, is a response to the challenges faced in identifying UBOs within complex ownership structures.
Key Updates:
1. Applicability:
– All UAE entities (mainland and Commercial Free Zones) are subject to the new regulations.
– Exceptions include government-owned companies, entities in financial free zones, and government partners.
2. Disclosure Requirements:
– Mainland companies and entities in Commercial Free Zones must adhere to the same disclosure requirements as per the previous Cabinet resolution.
– The Registrar has discretionary power to determine the beneficial owner, especially in complex structures, using a risk-based approach.
3. Anti-Money Laundering (AML) Measures:
– A Supreme Committee for AML strategy supervision is introduced.
– Each Registrar is mandated to implement AML measures, including risk assessment and mitigation.
4. Penalties and Administrative Fines:
– Penalties range from written warnings to fines, with new provisions allowing temporary license suspension or entity closure for repeated violations.
– A 14-day response time is established for entities to address Registrar requests.
5. Beneficial Owner Definition:
– Definition remains unchanged, emphasizing a natural person with at least 25% ownership or control.
– Registrars have discretion to determine beneficial owners considering a risk-based approach in complex structures.
6. Grievance Procedures:
– Revised procedures allow companies to file grievances against imposed penalties, with a 45-day decision period.
7. Disclosure Obligations:
– Prohibition on data disclosure without approval persists, with exemptions related to international laws and tax information exchange agreements.
8. Nominal Board Member Definition:
– Clarification on the definition of a "Nominal Board Member" as an individual acting according to another's will.
Conclusion:
The UAE's amendments aim to enhance transparency and compliance with UBO regulations, especially in intricate ownership scenarios. Entities should ensure prompt adherence to disclosure requirements and understand the implications of non-compliance.
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